Running a successful web development business


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A practical, common-sense process for building and running a successful web development business. Presented at Melbourne Joomla!Day on 20 Jan 2013.

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Running a successful web development business

  1. 1. Running a successful web development business Russell Searle 20 Jan 2013
  2. 2. Introduction • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing and expanding
  3. 3. What is success?My version of successNo bossBusiness 100% based on free open source productsWork when we choose for clients we chooseWork from home or anywhere in the worldKids’ educations paid forKids moved outOwn our houseInvestmentsNo debt
  4. 4. Planning and getting started • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing and expanding
  5. 5. HurdlesNot everyone is suited to running a business  Do you care more about security or freedom?Freelancer or business?  Freelancers interested in the work itself => resist hiring  Business focus on managed teams => hire best peopleHigh failure rate  Potentially very serious consequences  #1 cause of failure: bad management  #2 cause of failure: undercapitalisedMust have business development and management skills  Either have them already or …  Be committed to developing them
  6. 6. Market researchResearch your market and competitionBusiness volumesMarket ratesMarginsMarket segmentsIndustry segments…etc
  7. 7. Develop your strategySWOTVisionFocusSpecialisationsValue propositionMeasurable, time-bound goalsAction planContingenciesReserves
  8. 8. Support servicesAccountantLawyer or maybe legal documents resourceLocal business peers or business networkSmall business support services  e.g. Business Victoria, AGIMO, MMVAdvisors / mentorsTechnical resources to complement your skills  Graphics designers and artists  Photographers  Marketing support  Web developers
  9. 9. Set up your business #1Choose a safe, smart business name  Use ASIC company searchRegister your business nameBusiness structure  Best options: sole trader or single-director company  Limited Liability Company (LLC, Pty Ltd company)  Avoid partnerships, specially with relatives and friendsRegister with the Australian tax Office  Register for ABN and GST  Register ACN for an LLC
  10. 10. Set up your business #2Bank accountConsider insurance  Professional indemnity  Public liability  Home and contents  Life insuranceCustomer contractsEmployee/contractor contracts, if requiredConsider intellectual property risksCapital and operating funds
  11. 11. Start your engines #1• Reach out to contacts and prospects • Your network will provide > 80% of your business• Organise your calendar• Build your website and your points of presence• Implement a CRM• Put serious work into your lead generation and sales skills • Budget > 10% of your work week to business development• Get used to the discipline of ongoing pipeline management
  12. 12. Start your engines #2• Work your business • Treat it like a job, you are the boss and you should view your work performance as a boss would • Do unpleasant, boring tasks on a timetable • Use the UI grid (urgent-important) to manage your time.• Cash flow is king. Profitability is the state of grace. • If your business does not achieve a minimum 10% profit on top of all direct expenses within your planning horizon, you would be better off in a job
  13. 13. Key success factorsEnthusiasm Spend most of your time doing what you love, and let it showAttitude Collaborative, consultative approachHonesty Be honest with everybody, but especially with yourselfProfessionalism Provide customer service that you would expect for yourself, then do betterFocus Capitalise on your strengths, compensate for your weaknessesAction Do it right now! No excuses.Consistency Be reliable, keep commitments, do what you say you will doPersistence Have a solid, validated, adaptable plan, have faith in it, work it and stick to it
  14. 14. Getting established • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business
  15. 15. Consult and collaborate• Clients don’t want drills, they want holes • Judge yourself by your results, not your efforts • Outputs matter, not inputs• Don’t build web sites! • Work with your customers to produce IT facilities that solve their business problems or grow their business• Be a good, successful business person • Model ability and credibility so you can contribute to their business • Look for problems and solutions • Put in your best efforts and ideas to improve their business• Communicate • Assume nothing: ask questions and listen to the answers • Report clearly and often, in English and in optimal detail • Get understanding, agreement and approval • Never make promises you can’t keep
  16. 16. Business processes• Time recording and billing• Daily accounting• Customer relationship management• Team project management tools• Benchmarking• Blogging and social media
  17. 17. Important relationships• Family• Business partners• Staff• Contractors and freelancers• Advisors• Network
  18. 18. Selling your services • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business
  19. 19. Marketing foundation• Your purpose (vision, mission) • Your pitch (position statement, slogan, tagline, USP)• Your focus (specialisations, target markets) • Your ideal customer profile • Industries • Turnover • Head count • Operations • Maturity • Problems and pains
  20. 20. Marketing plan• Purpose (purpose and pitch)• Market profile (focus and customer profile)• Competitors• Marketing strategy • Channels and methods• Pricing and selling• Project delivery• Measurement • Project performance • Profitability
  21. 21. Marketing channelsFree Paid•Your client base •Sponsorship•Your peers and network •Advertising•Interest groups •Mainstream media•Events •Affiliate programs•Your website •Joint marketing•Social media •Co-branding•Forums and blogs•Search engine marketing
  22. 22. Selling skills• Your success has much more to do with your selling ability than your technical skills• Selling really means providing value to customers • Get over yourself • Be good at it• Not possible to cover selling skills in this workshop• Find and use a professional IT selling resource, e.g. • IBM PartnerWorld University (IBM business partners only)• Budget > 10% of your work week to business development
  23. 23. Running your business • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business
  24. 24. Customer service•Love the clients you have • Repeat business • Lowest cost source of business • Case studies, testimonials • Referrals, word of mouth • Reference sites• Keep communicating, stay in touch• See consult and collaborate, key success factors
  25. 25. Managing projects• Track and measure activity and progress • Can’t improve without benchmarks • Can’t benchmark without recording activity• Use shared tools • Online project management system • Online PSA (professional services application) • PSA should also handle time sheets and billing• Blend waterfall and agile methodologies • Cannot ‘quote’ for an agile project • Waterfall project structure around agile work packages
  26. 26. Customise SDLC Customise project method for scope and contextSection Stage Outcome Performed Approved Stage activity by byDefinition Requirements Specs Account Customer Clarify and document requirements statement, then obtain customer Manager approval of requirements. Design Specs Designer Designer Design or model solution. Produce technical specs, revised task estimates and test scenarios. If required, conduct evaluations and recommend. Proposal Project Account Customer Propose solution, adjust requirements and specs if required and ask for plan Manager approvalDevelopment Construction Feature Developer Developer Construct features and solution. Emphasise quality, flexible function and maintainability. Unit test assigned features. Testing Feature Tester Tester Test features and system interfaces based on business process, boundary conditions and functional specs. Analyse results and control defect resolution. Sign off system testing and deploy features to acceptance testing platform. Acceptance Feature Customer Customer Test features, interfaces and business process in the context of realistic customer-specific data. Report defects to Psicom and sign off acceptance testing when satisfied. Delivery Feature Project Account Publish changed parts to customers production server, configure, test Manager Manager and hand over for implementation.
  27. 27. Managing production• Software production management • Manage a continuous stream of software projects • Various sizes, multiple clients • Balance a changing mix of skills and resources • Within shifting demand • See Software production management article
  28. 28. Complaints• Complaints are opportunities in disguise• A customer whose complaint you have rectified is much more likely to recommend you • Take responsibility, but not necessarily blame • Be open, constructive, proactive • Clarify and agree requirements • Fix and confirm • Follow up
  29. 29. Difficult customers• Solutions are not architected, they are shaped • Most customers can’t express what they want, but they can help you shape a prototype• But some clients are not worth having • Won’t pay (ask for a deposit) • Ignorant and unwilling to learn • Arrogant • Unrealistic expectations • Unresponsive • Assumers: ‘I assumed I was going to get x, y or z’
  30. 30. Growing your business • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business
  31. 31. Larger clientsGood Bad •More demanding•Long term relationship •More stakeholders•Higher rates •More overheads•More realistic budgets •More politics•More professional •More reporting•Smarter people •More risk•Bigger projects •Tougher•More interesting work
  32. 32. Pitching to larger clients• Initially aim for smaller, low-risk projects• Sales cycle typically 9 – 18 months• Extensive, professional proposal required• RFTs are hard work, but can be won• Need formal legal structure and solid financials• Need prof indemnity/liability insurance
  33. 33. Evolve your business• Account management• Project management• Production management• Quality assurance• Technical range and capacity• Formalise maintenance support• Formalise tech standards and code reuse• Specialise market focus and internal roles• The purpose of a business is to be sold
  34. 34. Profitability for freelancersHow to eliminate tax return shock•Set your income goal for the year•Set your annual budget•Calculate your marginal tax rate•Add 2% to the rate•Put that percentage of every invoice into a separateprovision account